The Real Menu

Do you live with parents

Say your mom owns the house and you live in it then you can pay rent to your Mom and thereby, reduce your taxable income. Rent can be shown at two places:

1. if you are salaried and receive HRA then you can show rent paid there and the taxable part of HRA received goes down.2. You can also avail deduction under section 80GG.Both of these steps require some tricky math and for that you can usewww.ClearTax.inThere is a partial catch here. Your Mom’s income will go up and so her income tax. But, in most cases the increase in her tax will be less than the decrease in your income tax. So, it will turn out to be worth it. Reasons are:1. There is 30% deduction available on income from rent. So, the rent you showed, only 70% of it will show up in her taxable income.2. Women/ Senior Citizen have higher slab of tax free income.

So, it is time to find out how much HRA you are getting and start paying rent.